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Tuesday, and remainder of week: House-Senate conference committee to negotiate final stimulus bill

Friday: Target date for final vote on compromise measure

Track 2 - Completion of '09 Appropriations (Jan/Feb):

This week: House may consider FY '09 omnibus appropriations bill

March 6:Funding for much of the Federal Government expires under the terms of the current continuing resolution (see article below)

Track 3 - FY 2010 Budget:

President is normally required to transmit the
FY 2010 budget to Congress by the first Monday in February, however,
this being a presidential transition year, President Obama will likely
transmit a budget outline in March

Later this week: Treasury likely to release a new plan for expenditure of the remaining TARP funds

The House on Jan. 21 passed a bill introduced by Financial
Services Chairman Barney Frank to require that a portion of the
remaining $350 billion tranche of the TARP (Troubled Assets Relief
Program) be used for foreclosure mitigation

Economic Stimulus Package

As predicted in last week's Washington Budget Report, much of last week was consumed by stimulus negotiations among Senate moderates in an effort to secure 60 votes for the bill.

Reason: Passage of the stimulus bill in the Senate effectively requires a supermajority of 60 votes due to a threatened filibuster by Republicans. (Bill opponents can prevent a vote on the measure by engaging in prolonged debate--known as a filibuster. 60 votes are required in the Senate to shut down a filibuster.)

60 votes are also required in the Senate to overcome objections that the bill violates last year's congressional budget resolution by breaching spending and revenue levels.

Democrats currently have 56 seats in the Senate, plus the presumed support of Independents Bernie Sanders (I-VT) and Joe Lieberman (I-CT). A 59th vote from Minnesota Democrat Al Franken is not yet available due to the ongoing court litigation regarding last November's vote count.

Democrats therefore need two votes to reach the needed 60, and possibly three votes depending on the health of Sen. Edward Kennedy (D-MA).

Late last Friday, Senate moderates announced an amendment that would cut $108 billion from the original Senate bill to secure the support of Susan Collins (R-ME), Olympia Snowe (R-ME) of Maine, and Arlen Specter (R-PA).

In general, the modification cuts$83 billion in spending including funds for school construction, $7 billion in health care provisions (including COBRA subsidies and Health Technology), and $18 billion from the tax cut package.

After Senate moderates announced their agreement last Friday, House and Senate Republican leadership remained skeptical. According to Congress Daily, Senate Republican Leader Mitch McConnell (R-KY) said "most of us are deeply skeptical this will work...."

Key Differences in the House and Senate stimulus bills

Assuming the Senate gets 60 votes to pass the compromise bill (discussed above), big issues that will remain for the House-Senate conference committee this week:

The House bill allocates $79 billion for aid to the States, while the Senate compromise bill trims that to $39 billion. Larry Summers , Director of the White House National Economic Council, said "there are huge problems facing state and local governments, and that could lead to a vicious cycle of layoffs, falling home values, lower property taxes, more layoffs. And we've got to prevent that, so we're going to have to come togther in conference." Speaker Pelosi said last week she did not want to see a reduction in State aid. This will be a key issue in conference.

The Senate bill would provide a one-year $70 billion fix for the Alternative Minimum Tax (AMT) to prevent it from raising taxes on upper-middle class taxpayers, while the House would defer the issue until later in the year. (Many question the stimulative effect of including AMT in this bill.)

The Senate bill includes an amendment offered by Sen. Johnny Isakson (R-GA) that would create a $15.000 tax credit for homebuyers, at a cost of $35.5 billion, while the House bill provides a much more limited stimulus of $7500 only for first time homebuyers.

The Senate bill includes $18 billion for a refundable child care credit, while the House provision is leaner at $7.5 billion.

The Senate bill includes a one-time $300 check to retirees, disabled vets, and recipients of SSI (Supplemental Security Income) at a cost of $17 billion, while the House provision is more limited at a cost of $4 billion.

The House bill allocates $14 billion to public school construction, which Summers calls "an investment that can take place quickly....It's an investment that's labor-intensive," while the Senate compromise bill zeroes out school construction funding.

The Senate compromise allocates $7 billion for expanding broadband access, while the House bill would provide $3.2 billion.

President Signs Children's Health Insurance Expansion

President Obama signed into law last week HR 2, a bill to reauthorize and expandSCHIP
(the State Children's Health Insurance Program). SCHIP was first
enacted in 1997 for a 10-year period and has been operating under
temporary extensions.

The primary objective of SCHIP is to expand health coverage
for children in families who incomes are low but somewhat higher than
Medicaid's tight income eligibility limits. (Medicaid covers about 28
million children and SCHIP covers about 7 million children during the
course of a year.)

SCHIP is not an entitlement program. Rather, it is a Federal grant program
that allots available funds among the States, based on their number of
low-income uninsured children. The program was funded during its first
10 years at roughly $5 billion per year. States administer the program
within Federal guidelines.

The enacted legislation will increase SCHIP spending by about $32 billion over 5 years, which is paid for by increasing the federal excise tax on cigarettes from 39 cents/pack to $1/pack.

Unlike the economic stimulus bill which will notpaid for (because of an "emergency" designation), the SCHIP expansion is paid for as required by congressional PAYGO rules.